DALLAS – DaVita Rx LLC, a nationwide pharmacy that specializes in serving patients with severe kidney disease, agreed to pay a total of $63.7 million to resolve False Claims Act allegations relating to improper billing practices and unlawful financial inducements to federal healthcare program beneficiaries, the Justice Department announced today. DaVita Rx is based in Coppell, Texas.

The settlement resolves allegations that DaVita Rx billed federal healthcare programs for prescription medications that were never shipped, that were shipped but subsequently returned, and that did not comply with requirements for documentation of proof of delivery, refill requests, or patient consent. In addition, the settlement also resolves allegations that DaVita paid financial inducements to Federal healthcare program beneficiaries in violation of the Anti-Kickback Statute. Specifically, DaVita Rx allegedly accepted manufacturer copayment discount cards in lieu of collecting copayments from Medicare beneficiaries, routinely wrote off unpaid beneficiary debt, and extended discounts to beneficiaries who paid for their medications by credit card. These allegations relating to improper billing and unlawful financial inducements were the subject of self-disclosures by DaVita Rx and a subsequently filed whistleblower lawsuit.

“Providers should not make patient care decisions based upon improper financial incentives or encourage their patients to do the same,” said U.S. Attorney Erin Nealy Cox for the Northern District of Texas. “The U.S. Attorney’s Office has and will continue to work cooperatively with providers that bring such issues to light to redress the losses the federal healthcare system has incurred.”

DaVita Rx has agreed to pay a total of $63.7 million to resolve the allegations in its self-disclosures and the whistleblower lawsuit. DaVita Rx repaid approximately $22.2 million to federal healthcare programs following its self-disclosure and will pay an additional $38.3 million to the United States as part of the settlement agreement. In addition, $3.2 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement. The Medicaid program is jointly funded by the federal and state governments.

“Improper billing practices and unlawful financial inducements to health program beneficiaries can drive up our nation’s health care costs,” said Civil Division Acting Assistant Attorney General Chad Readler. “The settlement announced today reflects not only our commitment to protect the integrity of the healthcare system, but also our willingness to work with providers who review their own practices and make appropriate self-disclosures.”

“The conduct being resolved in this matter presents serious program integrity concerns” said CJ Porter, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, “DaVita Rx’s cooperation in the investigation of this matter was necessary and appropriate to reach this resolution.”

The lawsuit resolved by the settlement was filed by two former DaVita Rx employees, Patsy Gallian and Monique Jones, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they discover evidence that defendants have submitted false claims for government funds and to receive a share of any recovery. The case is captioned United States ex rel. Gallian v. DaVita Rx, LLC, No. 3:16-cv-0943-B (N.D. Tex.). The relators will receive roughly $2.1 million from the federal recovery.

The settlement of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477). HHS also offers several programs for health care providers to self-report potential fraud. More information on self-disclosure processes can be found on the HHS-OIG website.

The investigation was conducted by HHS-OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of Texas. The claims asserted by the government are allegations only and there has been no determination of liability.

Assistant U.S. Attorney Lisa-Beth C. Meletta handled this matter for the U.S. Attorney’s Office.